Open interest tells you how many lots are available in the market. Open interest is normally linked with the Futures and Options markets. Before trading with futures and options, you need to understand derivatives. Both future and options are the agreements to purchase a stock at a particular date in the future at a specified price.
A futures contract requires a buyer to purchase stocks and a seller to sell them on a specific date on the agreed price according to the futures agreement. In a futures agreement, the buyer and the seller have to either buy or sell stocks on the specific date at the agreed price. Options mean an investor has the right to buy or sell shares at a specific price.
Long Build up :
Long buildup means people are interested in buying particular stocks because they assume that the share price will move up.
Short Build up:
In the Short buildup, traders expect that stock price will move downwards, so they start selling their future contracts. If the stock price is moving downwards and open interest is moving up, we can say a short buildup occurs in the market.
Long unwinding
Long unwinding refers to when a stock price is moving up and strikes the trader's target. They will short their position and book profit.
Short covering
When an investor sells a stock that they don't own, it's known as short selling. Short selling is a way to bet that the stock price will decrease. To exit a short position is to purchase back the obtained stocks to return them to the lender, which is known as short covering.
